Trade headlines subsided, and prices followed. What's next?

Grain and Oilseeds Wrap Up

The corn market took a breather following yesterday’s excitement. The July contract continues to find overhead resistance above $4.80 while December corn was quick to back off from an overnight challenge of $5.00. Unless positive demand headlines stay front and center, fast planting progress and limited weather concerns likely limit major upside price action for the time being. Longer term, we see higher price potential as energy markets stay elevated and corn acreage totals remain an uncertainty. Plan on seeing plenty of back and forth price action in the meantime. 

July soybeans saw overnight strength fade throughout the daytime session while November soybeans held onto small gains. The July contract will need to push past $12.20 to avoid the look of a “head and shoulders” technical pattern that may signal a short-term high has been reached. Recent moves above $12.00 in the November soybean contract have been short-lived so don’t be surprised if another rally is met with selling interest, especially if the Trump/Xi news runs its course.

Wheat prices didn’t see much movement today, hanging within a few cents of unchanged after giving up 15 cent gains during Monday night’s session. Western wheat growing areas will face another round of frost concerns, while drought conditions have already heightened production uncertainty. If new highs materialize, be ready to turn defensive as quick upside bursts haven’t lasted long.    

Cattle

June live cattle continued to test the waters above $255 today on gains of $1.00 to $2.00 as prices hang out just shy of the recent $256.60 high. We’ve been paying close attention to hedging opportunities while futures prices aren’t responding with big upside momentum while cash markets continue to rally.

August feeder cattle continue to see big swings, with $4.00 to $5.00 gains today taking prices back to overhead resistance. A rally past $365 would put the bulls back in control after recent weakness had prices testing major long-term support at the 100-day moving average that currently sits at $357. If we see another day of strength quickly bring out selling interest, it probably means producers need to be taking defensive action as rallies occur. 

Hogs

July hogs fell for a fourth-straight session to take prices close to recent lows that have been set near $102. A breach of the $101 to $102 area will keep the hog market firmly stuck in a downtrend, so prices are at an important spot. It looks to us like rallies need to be used as an opportunity to get defensive while limited fresh positive news is available to shift the tide.

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